The three largest oil field services companies based in Houston reported trouble in their North American business lines for 2019, and the situation is still expected to be tough in 2020.
Lorenzo Simonelli, the CEO of Baker Hughes Co. (NYSE: BKR), said he expects drilling and completions spending in North America to move down at a low double-digit decline rate compared to 2019, based on budgets announced by the company’s potential customers. Simonelli was speaking on Baker Hughes’ fourth-quarter earnings conference call.
U.S. onshore oil and gas producers have faced tightening pressure from low oil prices and shifting investor expectations, which has resulted in greater discipline in their budgets. That, in turn, means less work and less pay for the oil field services and equipment companies they hire.
Halliburton Co. CEO Jeff Miller — speaking on his own company’s earnings conference call — said he saw the industry shift from growth to capital discipline in 2019. Halliburton’s (NYSE: HAL) North American revenue fell to $11.88 billion in 2019, a decrease of $2.55 billion compared to 2018, according to the company’s financial report.
“The U.S. shale industry is facing its biggest test since the 2015 downturn, with both capital discipline and slowing leading-edge efficiency gains weighing down activity and production,” Miller said.
That resulted in Halliburton starting a program in the fourth quarter intended to save $300 million each year, Miller said. The program involves, at least in part, personnel reductions and real estate rationalization, Miller said. The company has already realized the first $200 million in annualized savings from that, and it’s expecting to get the rest done in the first quarter, Miller said.
Schlumberger NV (NYSE: SLB) reported last week that it shed more than $1 billion in North American revenue during 2019, compared with the prior year, as challenges its customers faced bled into its own operations. Schlumberger produced $10.84 billion in 2019 North American revenue, down from $11.98 billion the year before.
“After two years of strong growth, North American revenue fell sharply,” CEO Olivier Le Peuch said in a press release on the results.
Schlumberger is the world’s largest oil field services company and has its primary offices in Houston, Paris, London and The Hague.
Financial results
Schlumberger reported a total 2019 revenue of $32.92 billion, basically flat with the prior year.
Houston-based Halliburton produced a 2019 revenue of $14.03 billion, down from $15.97 billion in 2018, according to its financial report.
Houston- and London-based Baker Hughes produced $23.84 billion in total revenue, up from $22.88 billion in 2018, according to its financial report.
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